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N.Y. Times Profits Drop Despite Online Subscriber Growth

Advertising revenues continue to fall at the New York Times, but digital subscribers continue to buy into the paywall

Without a permanent CEO and fresh off a major sale, the New York Times announced its fourth quarter results on Thursday, as profits dipped due to sagging ad revenue but the paper’s online subscriber base grew.

That has been the story of the year for the Times, unable to resurrect the moribund advertising business but hoping its new paywall can reap dividends until digital advertising picks up.

“"In 2011 we made significant strides in our strategy to transform and rebalance our Company," Arthur Sulzberger, Jr., chairman and temporary chief executive officer, said in a statement. "Our fourth-quarter results demonstrate the continued focus on building The Times's digital subscription base and developing a new robust consumer revenue stream, while maintaining its significant digital advertising business.”

The Times posted earnings per share of $0.39, an 11 percent drop from last year, and operating profit of $106.7, a four percent decline.

The company continued to cut costs, but revenues decreased 2.8 percent to $643 million thanks to a 7.1 drop in advertising revenues. Both print and digital ad revenues were down, though the latter was due to the floundering About.com. Digital ad revenues for the News Media Group increased by 5 percent.

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The Times demonstrated improvement on the digital side for 2011 as a whole, starting with an increase in advertising – 0.8 percent company wide but 10 percent at the News Media Group – and ending with its new paywall.

Digital subscribers for the Times and International Herald Tribune now sit at 390,000 since the paywall went up in March. Traffic to the Times website remains flat, contradicting the fear that a paywall diminishes one's web audience.

The Times draws 33 million monthly users in the United States and 48 million globally.

BostonGlobe.com, which put up a paywall in October, has attracted 16,000 subscribers to date. The Globe’s initial website, Boston.com, remains free but only carries a fraction of the newspaper’s content.

The Times will have more money to invest in digital in the coming year thanks to its sale of the Regional Media Group to Halifax Media, a deal that netted the company $143 million.

In its release, the Times said it would use that money “for general corporate purposes.”

The Times also plans to sell some its remaining shares in the Boston Red Sox for $30 million.

The company is still looking for a CEO since Janet L. Robinson left at the end of the year. Sulzberger, the publisher of the Times and the Chairman of the Times Company’s board, is filling in for now, but there has been much speculation about who might take the full-time job.

On the company's earnings call, Sulzberger described the CEO search as being in its "early stages" and added that the paper is looking for someone with "digital and brand building experience."

Whoever does will know the goal – add more subscribers and lock up those digital advertiers.